The news that the AUD/USD and NZD/USD are about to enter a correction seems to have pushed the long positions out of balance. This has resulted in a downtrend in the Australian Dollar, which has been closely followed by other major currency pairs.
The AUD/USD looks set to become one of the largest oversold positions this year. It is not too long ago that the AUD/USD was just touching the levels seen in the last months. So, what happened to push the AUD/USD into correction territory?
I believe that we are entering the fourth phase of the Zetatronic stock market trends where the ‘support’ is broken. In fact, I think that this will probably happen within the next couple of weeks.
I think that the support is broken due to the fact that this support is becoming more difficult to identify and therefore becomes more difficult to hold. Yes, it looks like a bottom has been reached and therefore many traders are starting to look towards a possible base at which to exit their positions. I would suggest that you go for one of these possibilities as it is the only way that you can benefit from this correction.
With this I mean that you should start looking for a new support at which to close out your positions. This is especially important if you are one of the ‘dump’ traders who are looking to exit your position so that you can start to start on a new line of trade.
The way that I see it, I can see four possible bases from which to exit:
First Base: If you are one of the ‘dump’ traders who are looking to exit your position, then you should consider using the upcoming support from the Chinese Traders to hold out until the AUD/USD falls further. The support may not be strong enough to be sustained through this decline in the AUD/USD so it is best that you wait until after the correction is over before making a call to sell your shares.
Second Base: I don’t believe that the Chinese Traders support will hold out much longer at this point. However, it is highly likely that the US Dollar will end up above the current levels of support as this cycle reaches its third phase.
Third Base: So, the support will hold out for another few weeks. I think that you will find that once this type of support is broken, that there is a new base from which to enter.
Fourth Phase: This is when the rally has peaked and the sell-off will start. Now, the main thing to look for is whether or not this support will hold out long enough for you to exit your position.
I think that the above scenario is possible at this point in time but I would urge that you don’t assume that it will happen. After all, this is the fourth phase and each phase takes time to take place.